Dissolving South Africa Inc. Privatization: Mandela government prepares to auction off unwieldy state companies.

March 17, 1997

UNTIL THE abolition of apartheid three years ago, much of South Africa's history had been marked by a power struggle not only between the blacks and whites but between the Dutch-descended Afrikaners and the English speakers. The Afrikaners defeated the English speakers politically in 1948. The next year, they started a systematic campaign toward eradicating whatever rights blacks had in the country.

As apartheid strengthened, so did the economic position of the white Afrikaners. Their government achieved much of this uplift by establishing a comprehensive network of state-run companies. They offered well-paying jobs, training and status to Afrikaners, who were migrating to cities from the backward countryside. Today, a startling 50 percent of South Africa's fixed assets are in government hands.

Since much of the private sector was controlled by the Oppenheimer family's Anglo American and De Beers conglomerates, South Africa's ownership was highly concentrated.

President Nelson Mandela and his African National Congress now seek to change that situation. They plan to privatize, at least partially, such huge state corporations as South African Airways and railroads, the telephone monoply, postal service, electric, oil and gas utilities and national parks. Among the key assets that would still be fully controlled by the government are the Armscor weapons manufacturing empire and the nationwide television network.

All this may seem contradictory to the ANC's philosophy which historically has often criticized capitalism while extolling socialism. Before he was released from his long jail sentence, Mr. Mandela, for example, advocated nationalization of mines, banks and "monopoly industries" and said it would be "inconceivable" for him to change that position.

Social and economic justice are still high on the ANC agenda. But South Africa's new rulers realize that bureaucratic state corporations cannot provide the rapid economic change and expansion that are needed to improve the condition of non-white residents. Their neighborhoods are often without electricity and telephones. Pent-up demand is so huge that waiting lists extend for years.

Mr. Mandela's privatization drive is further proof of his deft pragmatism.